Hyperliquid Moves Toward HYPE Token Burn As Validators

• Hyperliquid proposes burning 37M HYPE, cutting nearly 13% of circulating supply.
• Validators to vote on HYPE burn by Dec 24 using stake-weighted consensus.
• HYPE rises 2% after burn proposal as market awaits the final validator decision.

The Hyper Foundation has submitted a governance proposal that could permanently reduce the supply of HYPE tokens on Hyperliquid. The plan seeks approval to burn all HYPE tokens held in the Assistance Fund. If validators approve the proposal, both circulating and total supply would decline. The move comes after HYPE lost more than 50% of its value over recent months and faces pressure to restore market confidence.

On December 17, the Foundation posted the proposal and made it clear that a burn can only take place with the consent of a validator. The proposal seeks to formalize the way the network handles already locked out and unusable tokens. Proponents see the measure as a structural action instead of a momentary intervention in the market. The Foundation presented the vote as a decision on the supply account.

Hyperliquid Assistance Fund Holds 37M HYPE for Burn

The Assistance Fund is a layer-1 execution system of Hyperliquid. Part of trading fees are instantly turned into HYPE tokens. These tokens are specifically directed into a special system address. The mechanism is continuous and is not subject to manual control or governance measures.

If the proposal is approved, approximately 37 million HYPE tokens already in the Assistance Fund would be burned. This would also remove all of the future tokens to be delivered to that address from measurements of supply. The present balance is about 13% of the supply of HYPE. The move would consequently have a substantive effect on the market perception of HYPE scarcity.

These tokens will be decided by the validators’ voters as to whether they should be credited as having been out of circulation permanently. A Yes vote would authorize that interpretation throughout the network. The Hyper Foundation added that the approval would also create a clear precedent. 

Also Read: Hyperlane (HYPER) Falling Wedge Signals Potential 300% Long-Term Upside

The governance process is fixed in a schedule. The validators are required to place their positions in the governance forum by the end of December 21st, 04.00 UTC. Subsequently, token holders are free to stake with validators that they agree with. The process of staking continues until December 24, 04:00 UTC.

HYPE Burn Vote Gains Momentum Among Validators

The end result will be based on the consensus of the stakeholders considering the weighting at the end of voting. The proposal has already received support from several validators. Kinetiq x Hyperion voted publicly to convert all tokens into ashes in the Assistance Fund address.

The participants of the market anticipate that the burn will affect the price dynamics of the HYPE. A decreased supply may enhance confidence following months of decreased supply. Community debate has concentrated on the long-term transparency, in contrast to the short-term price movement. The vote has become a critical governance event of Hyperliquid.

The proposal comes together with other movements in the ecosystem. Bitwise recently revised its S-1 paper on a spot Hyperliquid ETF in the United States. The filing indicated that the management fee was 0.67% and the ticker symbol was “BHYP.”

After the announcement, HYPE improved approximately 2% and is currently trading at $27.40. During the same period, trading volume declined by 4.45%. The volume was approximately $372.68 million within the last 24 hours and is awaiting a validator’s decision.

Source: CoinMarketCap

Also Read: Bitwise Submits Hyperliquid ETF Amendment, Pointing to Imminent Launch